Hopes high as two firms triple oil estimates for Kenya at key blocks

Canadian oil exploration company Africa Oil Corporation has almost tripled its estimates of quantities of oil that that the blocks it is prospecting at contain, raising fresh hope that Kenya has commercially viable quantities.

In a report released on Wednesday following its latest independent assessment by Gaffney Cline & Associates, the firm says the recent discovery of oil has resulted in a considerable increase in the geological chance of success assigned to numerous prospects and leads, most notably in Lokichar sub-basin in Turkana.

The firm is prospecting at six oil blocks, accounting for about 12 per cent of Kenya’s 47 oil blocks.

“Gaffney Cline’s independent assessment confirms the enormous resource potential for our East Africa onshore acreage. The investment to date in our exploration programme has yielded good results, showing a considerable increase in the prospective resources assigned to a growing number of leads and prospects,” said Mr Keith Hill, Africa Oil’s president and chief executive officer.

The country is still waiting for an assessment of the oil found in Ngamia-1 well in March to know if it will become an oil producer.

Africa Oil Corporation and UK Company Tullow Oil Plc jointly own the well.

The firm says that according to recent studies, there is a possibility that Kenya could strike more oil than earlier anticipated.

According to a research note by Citi, the company (Africa Oil) has increased its overall prospective resource base to 9.3 billion barrels, up from 3.7 billion barrels it had earlier estimated for its total blocks.

In the new estimates, Block 10BA — which the company jointly operates with Tullow Oil — will contain the largest resource estimates, with a total 4.9 billion barrels, up from 1.1 billion barrels that were earlier estimated.

“This highlights what is believed to be the sweet spot in the tertiary rift play through Kenya and Ethiopia and is likely to be targeted in 2013,” read the Citi research note.

Although drilling activity at the Ngamia-1 well was suspended mid this year as a result of an encounter with an unexpected geological formation, the assessment predicts that the well could contain 188 million barrels of oil.

But further appraisal activity will be required to establish the full potential of the discovery.

The announcement comes days after the company, together with Tullow Oil, commenced drilling of its second well at Twiga South-1, located 22km north of Ngamia-1.

Plans are underway to move a second rig from Mombasa to the northern part of the country to commence drilling at Paipai by September.